The litmus test for Indian e-commerce companies is here.
Over the next three months – starting from Dussehra in October till Christmas – Indian retailers will register about 40% of their annual sales of clothes, electronics, automobiles, and household items. With a string of festivals, this period is often considered auspicious for making purchases.
Like last year, Indian e-commerce companies have lined up massive online sales to tap into this concentrated demand. And most industry players expect the scale and size of this year’s online festive shopping to be many times greater than last year.
“Last year’s festive season was a tipping point because, till that time, e-commerce demand was in bits and pieces with some people buying online and some not,” said Rohit Bansal, co-founder and chief operating officer of Snapdeal, one of India’s largest e-commerce companies. “But last year, when most companies were expecting just 20-30% increase in demand, many of us did 10 times the normal business. It was ridiculously high and no one was prepared for it.”
Snapdeal had seen a 15-fold increase in traffic during its Diwali discount period last year, as India’s young e-commerce companies hosted festive sales at a scale never seen before. The top three e-commerce players in India – Flipkart, Snapdeal and Amazon – reportedly spent around Rs 200 crore just on advertising and marketing these sales.
The results were spectacular. India’s e-commerce poster boy, Flipkart, sold 2 million products during its one-day sale event called Big Billion Day on October 6, 2014. That totalled to a gross merchandise value – the total value of goods sold through an e-commerce portal – of $100 million (Rs 649 crore) in just 10 hours.
The performance of rivals was equally impressive. Snapdeal saw a nearly 100% increase in sales over the preceding 30-day average. Amazon India’s traffic jumped by over 300% between October 10 and October 16, 2014.
This year, online retailers are being even more ambitious. While there are no estimates on the total GMV that Indian e-commerce companies had clocked during the festive season last year, recent reports claim that the industry is targetting online transactions worth more than $4 billion (Rs 25,994 crore) during the period this year.
“Overall, the festive season will be exciting this year because the scale of e-commerce in the country is very different compared to last year,” Snapdeal’s Bansal told Quartz.
All set for 2015
At Flipkart, India’s largest online retailer by GMV, preparations for the 2015 festive season began a few days after its BBD made its debut last year. After all, BBD – Flipkart’s version of Alibaba’s Singles’ Day sale – was a public-relations nightmare. Even though Flipkart raked in an impressive GMV, the event backfired as the company’s website crashed multiple times and stocks ran out.
The co-founders, Sachin Bansal and Binny Bansal, even had to issue an apology to their customers.
“For several months now, the senior leadership has been holding regular weekly or biweekly meetings about the preparations for the BBD sale,” a company executive told Quartz, requesting anonymity. “We are all working with a single focus – to ensure that BBD is seamless.” (Flipkart did not respond to an email from Quartz.)
Close competitor Snapdeal did the same. “We all took two days to unwind, refreshed ourselves and then we were back to prepare for 2015,” Snapdeal’s Bansal said.
Since last year’s festive season, the scale of online shopping in India has grown substantially. For example, between April and June 2015, Amazon India’s sales – after factoring in discounts, product returns, and taxes – increased over 300% compared to the same period last year. Flipkart’s sales in unit terms also rose by 150% between January and September, and Snapdeal reported a 222% increase in GMV during the April-June quarter.
Indian e-commerce businesses have also grown their warehousing and logistics capacities.
In September, Amazon India said it had opened seven new warehouses. It now has a total of 21 warehouses in 10 Indian states. “This investment in fulfilment infrastructure before the upcoming festive season will enable thousands of sellers to…grow exponentially during the country’s biggest shopping season,” Samir Kumar, vice president for category management at Amazon India, told Quartz in an email.
Snapdeal, which had a “very small” warehousing capacity last year, according to Bansal, has increased it to over 1.5 million square feet now.
Playing it safe
After bleeding each other dry with deep discounts during last year’s festive season sales, Indian e-commerce companies are reportedly keeping more reasonable targets this time.
Online retailers may not offer unrealistic discounts this year as they look to protect their margins. Last year, some e-commerce platforms had offered 40%-80% discount on items during the festive season. The discounts are likely to be between 5% and 15% this time.
The decision has been taken at a time when several online retailers have gone public with their plans to turn profitable over the next few years. For example, Myntra – which was acquired by Flipkart last year for over $300 million – has said that it is looking to become profitable by March 2016. Online furniture retailer Pepperfry has said it will turn profitable by 2017.
India’s online retailers are also ready to take on the other big change in their ecosystem: The rise of the mobile app.
Flipkart, which gets around 75% of its traffic from mobile and has been toying with the idea of shutting down its website, will be hosting this year’s BBD only on its mobile app. That’ll mean dealing with another set of technology challenges to ensure that the platform delivers during the likely surge in traffic.
Hopefully, there won’t be a need for an apology this time.
This article was originally published on Qz.com.
Over the next three months – starting from Dussehra in October till Christmas – Indian retailers will register about 40% of their annual sales of clothes, electronics, automobiles, and household items. With a string of festivals, this period is often considered auspicious for making purchases.
Like last year, Indian e-commerce companies have lined up massive online sales to tap into this concentrated demand. And most industry players expect the scale and size of this year’s online festive shopping to be many times greater than last year.
“Last year’s festive season was a tipping point because, till that time, e-commerce demand was in bits and pieces with some people buying online and some not,” said Rohit Bansal, co-founder and chief operating officer of Snapdeal, one of India’s largest e-commerce companies. “But last year, when most companies were expecting just 20-30% increase in demand, many of us did 10 times the normal business. It was ridiculously high and no one was prepared for it.”
Snapdeal had seen a 15-fold increase in traffic during its Diwali discount period last year, as India’s young e-commerce companies hosted festive sales at a scale never seen before. The top three e-commerce players in India – Flipkart, Snapdeal and Amazon – reportedly spent around Rs 200 crore just on advertising and marketing these sales.
The results were spectacular. India’s e-commerce poster boy, Flipkart, sold 2 million products during its one-day sale event called Big Billion Day on October 6, 2014. That totalled to a gross merchandise value – the total value of goods sold through an e-commerce portal – of $100 million (Rs 649 crore) in just 10 hours.
The performance of rivals was equally impressive. Snapdeal saw a nearly 100% increase in sales over the preceding 30-day average. Amazon India’s traffic jumped by over 300% between October 10 and October 16, 2014.
This year, online retailers are being even more ambitious. While there are no estimates on the total GMV that Indian e-commerce companies had clocked during the festive season last year, recent reports claim that the industry is targetting online transactions worth more than $4 billion (Rs 25,994 crore) during the period this year.
“Overall, the festive season will be exciting this year because the scale of e-commerce in the country is very different compared to last year,” Snapdeal’s Bansal told Quartz.
All set for 2015
At Flipkart, India’s largest online retailer by GMV, preparations for the 2015 festive season began a few days after its BBD made its debut last year. After all, BBD – Flipkart’s version of Alibaba’s Singles’ Day sale – was a public-relations nightmare. Even though Flipkart raked in an impressive GMV, the event backfired as the company’s website crashed multiple times and stocks ran out.
The co-founders, Sachin Bansal and Binny Bansal, even had to issue an apology to their customers.
“For several months now, the senior leadership has been holding regular weekly or biweekly meetings about the preparations for the BBD sale,” a company executive told Quartz, requesting anonymity. “We are all working with a single focus – to ensure that BBD is seamless.” (Flipkart did not respond to an email from Quartz.)
Close competitor Snapdeal did the same. “We all took two days to unwind, refreshed ourselves and then we were back to prepare for 2015,” Snapdeal’s Bansal said.
Since last year’s festive season, the scale of online shopping in India has grown substantially. For example, between April and June 2015, Amazon India’s sales – after factoring in discounts, product returns, and taxes – increased over 300% compared to the same period last year. Flipkart’s sales in unit terms also rose by 150% between January and September, and Snapdeal reported a 222% increase in GMV during the April-June quarter.
Indian e-commerce businesses have also grown their warehousing and logistics capacities.
In September, Amazon India said it had opened seven new warehouses. It now has a total of 21 warehouses in 10 Indian states. “This investment in fulfilment infrastructure before the upcoming festive season will enable thousands of sellers to…grow exponentially during the country’s biggest shopping season,” Samir Kumar, vice president for category management at Amazon India, told Quartz in an email.
Snapdeal, which had a “very small” warehousing capacity last year, according to Bansal, has increased it to over 1.5 million square feet now.
Playing it safe
After bleeding each other dry with deep discounts during last year’s festive season sales, Indian e-commerce companies are reportedly keeping more reasonable targets this time.
Online retailers may not offer unrealistic discounts this year as they look to protect their margins. Last year, some e-commerce platforms had offered 40%-80% discount on items during the festive season. The discounts are likely to be between 5% and 15% this time.
The decision has been taken at a time when several online retailers have gone public with their plans to turn profitable over the next few years. For example, Myntra – which was acquired by Flipkart last year for over $300 million – has said that it is looking to become profitable by March 2016. Online furniture retailer Pepperfry has said it will turn profitable by 2017.
India’s online retailers are also ready to take on the other big change in their ecosystem: The rise of the mobile app.
Flipkart, which gets around 75% of its traffic from mobile and has been toying with the idea of shutting down its website, will be hosting this year’s BBD only on its mobile app. That’ll mean dealing with another set of technology challenges to ensure that the platform delivers during the likely surge in traffic.
Hopefully, there won’t be a need for an apology this time.
This article was originally published on Qz.com.
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